All the sub-indices recorded a rise last month, with the Expectations Index increasing by 13 points to 70 - a rise on this scale has not been seen since May 2007. The Present Situation Index, which had been falling since June 2008, recorded a one point increase to 21. The Spending Index moved only marginally during the month and continued its upward trend from 97 to 98.
The improvement in confidence this month, particularly in the Expectations Index, may reflect reports that, whilst the UK economy remains in recession, the rate of economic decline is beginning to ease. Only marginal changes were seen in the Present Situation Index, suggesting that consumers remain concerned about the current economic environment and the labour market. It is too early to say whether April’s results mark the start of an upturn in confidence. Expectations about house price falls over the next six months improved further in April. Consumers now expect prices to fall by 2% over the next six months, compared with 3% in March.
Martin Gahbauer, Nationwide's senior economist, said: "In recent weeks, we have seen a strong rebound in global equity markets and some tentative signs of improvement in housing market indicators, both of which may have contributed to the marked upturn in consumer confidence during April. A number of the world's largest banks also announced a return to profits and this may signal the start of a thaw in the money markets and an improvement in lending conditions. However, it is likely that the UK economy will continue to contract for some time yet, so it is too early to say whether this trend in confidence will continue into the next month as consumers continue to digest further industry data and the 2009 Budget."
